WB outlines key reforms to boost growth, create jobs

KATHMANDU, MARCH 24: Nepal has made remarkable progress in poverty reduction, nearly eradicating extreme poverty, largely due to remittances, according to the World Bank (WB)'s Nepal Country Economic Memorandum: Unlocking Nepal’s Growth Potential, released today. However, economic growth remains sluggish, averaging just 4.2 per cent annually from 1996 to 2023, ranking Nepal sixth out of eight South Asian nations.

"Structural challenges such as low productivity, declining exports, and a stagnant industrial sector have slowed job creation, pushing young workers abroad for better opportunities, "stated the WB.

“Nepal’s success in poverty reduction is impressive, but its economic potential remains untapped,”  David Sislen, the World Bank’s Country Director for Maldives, Nepal, and Sri Lanka, said. He emphasized the need for policy reforms to boost exports, enhance migration benefits, expand hydropower, and accelerate digitalization.

Vice Chairman of the National Planning Commission, Prof. Dr. Shiva Raj Adhikari, reportedly reaffirmed Nepal’s commitment to good governance, job creation, and sustainable growth under the 16th Plan.

The Nepal Country Economic Memorandum recommends policy actions in four critical areas to unlock Nepal's economic potential. First, a well-structured migration system to maximize economic benefits by reducing costs, increasing safety for low-skilled workers, and diversifying skillsets and destinations should be in place.

Second, strengthening exports requires improving market competition, infrastructure, and trade policies to enhance competitiveness.

Third, hydropower development needs clearer financing strategies, regulatory improvements, and streamlined licensing to attract investment.

Finally, the digital sector must modernize regulations, improve digital infrastructure, and integrate digital skills into education and workforce training.

Published every five years, the Nepal Country Economic Memorandum serves as a roadmap for Nepal’s economic transformation as it prepares to transition from Least Developed Country (LDC) status.